5 Based upon the following data determine the cost of mercha

5. Based upon the following data, determine the cost of merchandise sold for May (13 percent) Merchandise Inventory,May 1 $131,000 Merchandise Inventory, May 31 14,000 1,978,000 35,500 52,000 Purchases Purchases Returns Discounts 21.300 In

Solution

Cost of merchandise sold:

Merchandise Inventory May 1			$131,000
Purchases		$1,978,000
Less: Purchases Returns and Allowances	$35,500
Purchases Discounts	$52,000	$87,500
Net Purchases		$1,890,500
Add: Transportation In		$21,300
Cost of merchandise purchased			$1,911,800
Merchandise available for sale			$2,042,800
Less merchandise inventory May 31			$145,000
Cost of merchandise sold			$1,897,800